A Louisiana Court of Appeal has upheld efforts by a risk retention group to compel arbitration of a direct action plaintiff’s claims holding that the Liability Risk Retention Act of 1986 (LRRA) preempts Louisiana’s Direct Action Statute. Ronald Courville v. Allied Professional Insurance Co., 2015 WL 3536119 (La. App. 1 Cir. June 5, 2015).

A doctor sued for medical malpractice was insured by a risk retention group, which was sued by the doctor’s patient under Louisiana’s Direct Action Statute. It moved to compel arbitration arguing that the LRRA preempts the Direct Action Statute and that the arbitration provision in the policy required arbitration of the patient’s claim. The district court stayed the case and ordered arbitration. The patient appealed.

The Court of Appeal held that direct action claims against risk retention groups are not permitted by virtue of the LRRA as it is exempt from state law and that neither Louisiana’s Anti-Arbitration Statute (La. R.S. §22:868) nor the Direct Action Statute (La. R.S. §22:1269) permit direct action claims against it. The court did lift the stay as to the patient’s claim against the doctor only finding that although the arbitration agreement was enforceable as to the insurer, it could not be imposed on the patient’s claims against the doctor as the patient was not a party to the agreement.